Surveyors oppose government plan to value state assets policy

Surveyors have protested and opposed plans by the government to come up with a new policy to value government assets.

The Institution of Surveyors of Kenya(ISK), which includes valuers as one of its eight major professional disciplines, said its members were not consulted in the development of the Draft Government Assets Valuation Policy.

On Tuesday, the National Treasury, in an advert in the local dailies, called for public participation in various parts of the country from September 1 on the draft policy.

The State said it is implementing a new policy and framework to value its assets to improve Public Financial Management (PFM), boost transparency and strengthen management of public debt and pending bills.

“While the policy provides a comprehensive framework to guide the identification, classification, evaluation and reporting of public assets across all levels of government, we note with great concern that the policy has significant errors with substantial implications on the evaluation profession in Kenya,” said Eric Nyadimo, President of ISK during a press conference at their offices in Nairobi.

He added: “The policy as currently drafted circumvents the Valuers Act CAP 532 and disregards existing policies and standards that govern the evaluation practice, such as the Kenya Valuation Standards 2021, the International Valuation Standards 2025 and other appropriate international assets evaluation standards.”

The Act and these guidelines, Nyadimo said guarantee high professional valuation standards to ensure that public resources are valued by professionals who are governed by law and are of high integrity for the preservation of public assets.

In Kenya, he said the valuation profession is regulated by the Valuers Registration Board(VRB), established under the Valuers Act CAP 532, the ISK's Evaluation Standards 2021 and other relevant international valuation standards.

The ISK and VRB, Nyadimo said, are therefore very critical in the formulation of any policy dealing with valuation in the country.

“It is regrettable that these two institutions have not been involved in the formulation of this draft policy,” said Nyadimo.

He added: “We add that valuation is an expression of opinion of value by a registered and licensed valuer. World over, only a valuer can express an opinion of value and attach a value to an asset.”

This expertise, he said, follows a period of training at the graduate level, internship under a registered valuer, professional examination in valuation and registration by relevant registration boards such as the VRB.

Nyadimo said in arriving at appropriate values subject to the purpose of valuation, valuers consume primary and secondary information, including asset inventories, condition assessment reports and financial reports from other professionals such as accountants, engineers and agronomists.

“The draft policy misconstrues the production of inventories, management estimates, and planned machinery and equipment condition reports as valuation,” he said.

Nyadimo added: “This risks introducing persons not trained, registered and licensed as valuers into the profession, resulting in loss of  public assets and increase of fraud through misrepresentation, overvaluation, undervaluation and insufficient due diligence affecting prudent decision making on public assets.”

Historically, he said, the financing, procurement, management and valuation of assets has been separated to institute the necessary checks and balances that lead to prudent asset management practices.

Merging these processes, Nyadimo said, is against best practices both locally and internationally.

“As ISK, we hold the view that there is no gap in the definition and regulation of the valuation practice as alleged in the draft policy,” said Nyadimo.

He added: “As ISK, we argue that the draft policy document, if reviewed and modified to align with the Valuers Act Gap 532, would be more beneficial as guidance notes on government asset valuation without altering the definition and regulation of the valuation profession.”

He said that ISK is currently undertaking a review of the Kenya Valuation Standards to reflect emerging valuation trends.

The institution also raised concern that the proposed Board for the Regulation of Public Assets in the policy will overlap in mandate with the VRB, which already regulates the valuation practice both in the private and the public sectors.

“As an institution, we are totally opposed to the draft policy in its current form and recommend for a total overhaul of the Government Assets Valuation Policy Framework for the public sector,” he said.

The ISK is also recommending that a proper stakeholder group be put in place while giving due regard to the ISK, Valuers Registration Board, Ministry of Lands, Public Works, Housing and Urban Development, the National Land Commission, as well as the Institutions of higher learning.

“This, we believe, will allow for fair administrative action in participatory policy development and to ensure that the policy is in line with the existing laws and international best practice.

Asked if they got an invitation to give their views, he said they received a letter on Tuesday inviting them for public participation today(Wednesday), have already met with the team that is working on the document and have already shared with them a memo with regard to this particular issue.

“In terms of stakeholder participation, we shall evaluate and see whether we need to be able to participate or not, but at the onset we are saying that this policy document is flawed in its current form and the best thing would be to not waste public funds by subjecting a flawed document to a public participation exercise, which is already costing this country a lot of money,” he said.

He said they are evaluating their options, so going to court is still the main option that they can be able to consider.

Nelly Mbugua, vice president of ISK said the summary or the import of the policy is an illegality that the country wants to proceed with because there is no gap.

“We don't have a gap either in terms of professionals or guidelines. The government has in place, through the Ministry of Lands, a Chief Government valuer who is expected to provide guidelines on how valuations for public assets should be done. Unfortunately, the documents were mixed up. It goes ahead to give roles to persons that have no training, licence or background in valuation," she said.

“One instance is where there is a mention of valuation of a plant by mechanical engineers. Our laws are very clear, the Valuers Act is very clear on who can value, whether it's anything under the earth, on it and above it,” added Mbugua.

She said there is a lot of mix-up, disregard of existing laws, so it's as though we are creating others to overlap other statutes.